2001-04-07 04:00:00 PDT San Francisco -- With theme-park museums and tacky tourist developments getting favorable treatment here in recent years, it's not surprising that many people see San Francisco as moving ever closer to Las Vegas.

And on Monday, we'll have the best indication yet, since the Board of Supervisors appears poised to roll the dice on the biggest business deal to grip the city in decades.

Far be it for me to say that we don't have the right team for the job, but I admit I'd be a lot more comfortable if they were gambling with Monopoly money instead of our own. Or if Alan Greenspan were here to provide advice and give a knowing curl of his eyebrow before heading back to Olympus.

But the money is real, the situation rather grave and only our supervisors are there to save us.

Man the lifeboats.

The board is scheduled to vote Monday on whether to pay about $69 million to a number of companies to settle lawsuits over the city's business tax structure. But one should never bring a financial analyst to a political fight,

which is why the board appears ready to rumble even if the potential result is long-term economic disaster.

About 8,000 businesses in town pay either a gross receipts tax or a payroll tax, whichever is higher based on a certain formula. Two years ago, after a similar case in Los Angeles, several companies filed suit against San Francisco alleging that its system amounts to a form of double taxation and discriminates against out-of-town companies. (Some of my favorite companies are involved in the lawsuit, including General Motors, Eastman Kodak, PG&E, Chevron and the beloved Hearst Corp., publisher of the mighty Chronicle.)

So far, the courts have ruled that the tax is unconstitutional, which is why the city has been scrambling to come up with ways to address it. The reasoning is based on the potential hit to the city budget that could be as high as $800 million in court judgments if the city doesn't settle soon.

This will explain why three top officials at City Hall, Treasurer Susan Leal, Controller Ed Harrington and City Attorney Louise Renne have recommended that San Francisco settle the lawsuit rather than try its luck with higher courts. And the settlement agreement was reached through mediation with former state Supreme Court Justice Edward Panelli, no slouch in the intellect and resolution department.

The risk analysis goes like this: The board can sign off on a $69 million settlement now or it can continue to fight the lawsuit and hope that an appeals judge doesn't rule that the city must refund all of its tax collections over three years plus interest -- which could be $300 million or, in the apocalyptic scenario, $800 million -- about one-sixth of the city's annual budget.

"This is certainly the best deal we've been able to achieve, though it isn't an easy recommendation to make," Renne told me on Thursday. "But the stakes are so high we would be remiss in not bringing it to the board. I'm not shying away from a good fight but there does come a time when you have to look at your potential liability."

From a purely financial point of view, the current deal looks about as good as it gets, even though $69 million and change is nothing to sneeze at. City services would take a considerable hit in the next few years.

And for some of the new supervisors, that's a bitter pill to swallow, particularly inasmuch as it involves (in their minds) big corporations and the "downtown business interests," which some of the board members see as immoral merchants of greed. A few have called the lawsuit a form of extortion and pledged to fight to the death -- or until the treasury runs out -- whichever comes first.

To Supervisor Gerardo Sandoval, the central issue is whether the board will have any money to pay for essential city services such as libraries and street cleaning in the next few years. He believes that if a stronger case is made to the corporations about their moral responsibility -- and the potential financial hit they would possibly face in the form of newer, higher taxes -- the city might be able to strike a better deal.

"I see this as a windfall to the corporations, especially since the harm that they have suffered has not been great," he said. "So at this point I'm against the settlement, but I have to admit I'm worried. This is the biggest issue this board will face in the next few years."

Sandoval believes a strong argument can be made that since the companies haven't been hurt, that a high court might not feel obliged to reward a major settlement. But he admits that on the legal "technical" issues -- such as the fact that the business tax has been ruled unconstitutional -- the city is on slippery footing.

That's quite a technicality, one on which rests the possible difference between hundreds of millions of city dollars. That's a pretty risky venture for any business, especially when the business is the city treasury.

The agreement needs six votes to pass, and with Gavin Newsom recused because of a conflict of interest, that leaves 10 board members left at the poker table.

I know how I'd play this hand, but then, I believe in reading the cards rather than the stars or the Bay Guardian.

Astrology and ideology don't usually make for sound financial decisions. But that's San Francisco for you -- always daring to be different.